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Here we present a list of 20 biotech stocks that have seen increasing shares shorted over the last three months (from 11/15/10 to 2/15/11).

Is this excessive pessimism justified? Some of these names could be ripe for a contrarian opportunity as they experience the inevitable short-covering. What do you think? Details below.

Short trends data sourced from AOL Money, all other data sourced from Finviz.

Click for expanded images



The list has been sorted by the change in shares shorted over the last three months.

1. NPS Pharmaceuticals, Inc. (NASDAQ:NPSP): Market cap of $511.13M. Shares shorted have increased 143.41% over the last three months (from 2.58M to 6.28M shares shorted). After a solid performance over the last year, NPSP has pulled back during recent sessions. The stock has lost 24.48% over the last month (trading -5.63% below its SMA20 and -3.39% below its SMA50, but remains 11.56% above its SMA200).

2. Clinical Data, Inc. (NASDAQ:CLDA): Market cap of $938.09M. Shares shorted have increased 139.84% over the last three months (from 2.46M to 5.9M shares shorted). The stock has gained 52.08% over the last year.

3. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN): Market cap of $3.27B. Shares shorted have increased 79.80% over the last three months (from 4.06M to 7.3M shares shorted). The stock is a short squeeze candidate, with a short float at 11.26% (equivalent to 14.03 days of average volume). The stock has gained 45.4% over the last year.

4. Sangamo Biosciences Inc. (NASDAQ:SGMO):
Market cap of $362.91M. Shares shorted have increased 59.07% over the last three months (from 3.64M to 5.79M shares shorted). Short float at 13.53% (equivalent to 8.28 days of average volume). The stock has had a couple of great days, gaining 5.41% over the last week.

5. Dendreon Corp. (NASDAQ:DNDN):
Market cap of $4.83B. Shares shorted have increased 53.99% over the last three months (from 9.39M to 14.46M shares shorted). Short float at 10.08% (equivalent to 5.39 days of average volume). The stock has lost 0.42% over the last year.

6. PDL BioPharma, Inc. (NASDAQ:PDLI): Market cap of $811.54M. Shares shorted have increased 36.48% over the last three months (from 8.69M to 11.86M shares shorted). Relatively low correlation to the market (beta = 0.54). The stock has had a couple of great days, gaining 22.06% over the last week.

7. China Biologic Products, Inc. (NASDAQ:CBPO)
: Market cap of $407.70M. Shares shorted have increased 33.96% over the last three months (from 1.06M to 1.42M shares shorted). The stock is a short squeeze candidate, with a short float at 13.26% (equivalent to 14.59 days of average volume). The stock has gained 76.71% over the last year.

8. Jazz Pharmaceuticals, Inc. (NASDAQ:JAZZ)
: Market cap of $981.56M. Shares shorted have increased 32.79% over the last three months (from 1.83M to 2.43M shares shorted). This is a risky stock that is significantly more volatile than the overall market (beta = 2.47). At present, it's exhibiting strong upside momentum - currently trading 14.57% above its SMA20, 21.74% above its SMA50, and 96.52% above its SMA200.

9. Exelixis, Inc. (NASDAQ:EXEL): Market cap of $1.35B. Shares shorted have increased 29.18% over the last three months (from 6.82M to 8.81M shares shorted). Exhibiting strong upside momentum - currently trading 16.95% above its SMA20, 34.56% above its SMA50, and 122.67% above its SMA200. The stock has had a couple of great days, gaining 6.68% over the last week.

10. Cephalon Inc. (NASDAQ:CEPH): Market cap of $4.34B. Shares shorted have increased 28.64% over the last three months (from 11.14M to 14.33M shares shorted). Relatively low correlation to the market (beta = 0.42). Short float at 19.06% (equivalent to 10.08 days of average volume). The stock has lost 19.15% over the last year.

11. Seattle Genetics Inc. (NASDAQ:SGEN):
Market cap of $1.67B. Shares shorted have increased 28.42% over the last three months (from 11.93M to 15.32M shares shorted). Short float at 13.93% (equivalent to 15.11 days of average volume). The stock has gained 33.72% over the last year.

12. VIVUS Inc. (NASDAQ:VVUS): Market cap of $565.22M. Shares shorted have increased 24.47% over the last three months (from 13.24M to 16.48M shares shorted). The stock is currently stuck in a downtrend, trading -6.7% below its SMA20, -20.1% below its SMA50, and -11.8% below its SMA200. It's been a rough couple of days for the stock, losing 5.31% over the last week.

13. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX): Market cap of $641.38M. Shares shorted have increased 24.18% over the last three months (from 7.9M to 9.81M shares shorted). The stock has had a couple of great days, gaining 5.56% over the last week.

14. Human Genome Sciences Inc. (HGSI)
: Market cap of $4.78B. Shares shorted have increased 24.07% over the last three months (from 11.01M to 13.66M shares shorted). Short float at 7.25% (equivalent to 5.9 days of average volume). The stock has lost 18.55% over the last year.

15. BioTime, Inc. Common Stock (NYSEMKT:BTX): Market cap of $368.90M. Shares shorted have increased 22.74% over the last three months (from 3.43M to 4.21M shares shorted). Short float at 9.89% (equivalent to 14.75 days of average volume). The stock has had a couple of great days, gaining 18.68% over the last week.

16. Cadence Pharmaceuticals Inc. (CADX): Market cap of $373.28M. Shares shorted have increased 22.44% over the last three months (from 11.54M to 14.13M shares shorted). Short float at 28.9% (equivalent to 38.73 days of average volume). The stock has lost 19.87% over the last year.

17. Enzon Pharmaceuticals Inc. (NASDAQ:ENZN): Market cap of $635.74M. Shares shorted have increased 19.09% over the last three months (from 5.5M to 6.55M shares shorted). Short float at 11.39% (equivalent to 14.95 days of average volume). The stock has gained 8.46% over the last year.

18. Questcor Pharmaceuticals, Inc. (QCOR): Market cap of $799.23M. Shares shorted have increased 18.96% over the last three months (from 8.23M to 9.79M shares shorted). Relatively low correlation to the market (beta = -0.14). The stock is a short squeeze candidate, with a short float at 17.76% (equivalent to 9.32 days of average volume). The stock has performed poorly over the last month, losing 17.21%.

19. Medivation, Inc. (NASDAQ:MDVN):
Market cap of $573.52M. Shares shorted have increased 15.18% over the last three months (from 1.91M to 2.2M shares shorted). The stock is a short squeeze candidate, with a short float at 6.72% (equivalent to 5.56 days of average volume). The stock has had a good month, gaining 17.83%.

20. Illumina Inc. (NASDAQ:ILMN): Market cap of $8.44B. Shares shorted have increased 12.58% over the last three months (from 9.06M to 10.2M shares shorted). Relatively low correlation to the market (beta = 0.52). Short float at 8.27% (equivalent to 6.95 days of average volume). The stock has gained 73.51% over the last year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Squeeze Ideas: 20 Biotech Stocks Targeted by Short Sellers